The Telegraph
Tuesday , February 11 , 2014
CIMA Gallary

Tata Motors breaks jinx

Mumbai, Feb. 10: Tata Motors has hauled its domestic operations out of losses.

Buoyed by a one-time profit of Rs 1,947 crore from the sale of its investments in overseas companies to its Singapore step-down subsidiary and a tax credit of Rs 630 crore, the auto maker turned a second quarter loss of Rs 803.53 crore into a third-quarter profit of Rs 1,251.4 crore.

The auto maker, which has been roiled by falling demand for its vehicles at home and last month’s sudden and untimely demise of its managing director Karl Slym, had suffered a net loss of Rs 458 crore in the third quarter of last year.

CFO C. Ramakrishnan admitted that if it wasn’t for the two cash gushing elements, the auto maker’s numbers would have looked worse than in the trailing quarter because of the tough times that the entire automobile industry had been going through.

However, Jaguar Land Rover (JLR) continues to purr and the spectacular sales that it has chalked up in markets such as China helped Tata Motors report a consolidated net profit of Rs 4,805 crore, up by a staggering 195 per cent from Rs 1,628 crore in the same period last year.

Last week, as part of an interim measure, Tata Motors had announced the setting up of a Corporate Steering Committee to be headed by group chairman Cyrus Mistry. The committee will focus on outlining strategy and focus on key aspects of the company’s operations. Mistry will also chair the new product design and engineering review meetings.

Asked when the company planned to appoint a new MD, Ramakrishnan said the company had put an interim arrangement in place and the issue would be addressed in due course. He refused to set a timeline for the selection of the new MD.

Tata Motors sold off its investment in Tata Daewoo Commercial Vehicle Company to TML Holdings Pte Ltd, Singapore, a wholly owned subsidiary. Tata Motors is planning to sell its investments in other international operations in Thailand and South Africa, which will be completed this quarter.

The slowdown in the domestic economy has been impacting both the commercial vehicle and passenger car segments with discretionary spending taking a hit because of the inflation. Amid low volumes for the industry, the challenging conditions has put upward pressure on marketing costs even as discounts are being offered to rope in customers.

Ramakrishnan said the fortunes of the domestic automobile industry would largely depend on the macroeconomic conditions. Last week, the Central Statistical Organisation has already forecast that the economy will grow by just 4.9 per cent this fiscal ending March 31 marginally higher than the revised estimate of 4.5 per cent in 2012-13, which means that auto makers are in for some dog days ahead. Even if the situation improves, it will get reflected in the sector only with a lag of couple of quarters.

At a consolidated level, revenues (net of excise) showed a growth of nearly 39 per cent at Rs 63,877 crore against Rs 46,090 crore in the same quarter of the previous year, following strong demand, growth in volumes and favourable product and geographic mix at JLR.

JLR saw both wholesale and retail volumes rising 22.7 per cent and 26.5 per cent, respectively. Revenues for the quarter ended December 31 stood at 5,328 million, registering a growth of 40.1 per cent over 3,804 million during the corresponding quarter last year.

Further, operating margin for the quarter stood at nearly 18 per cent, a strong gain of 390 basis points because of richer product mix, supported by the launch of the new Range Rover Sport, new Range Rover and Jaguar F-Type, and better geographic mix.